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What Will Post COVID-19 Lockdown Look Like For Retail? Early Directional Insights From China

By Thomas O'Connor | April 13, 2020 | 0 Comments

As talk in Western Markets starts to increase about re-opening some of our economies – Austria for example expects to have all retail stores open by May 1st – businesses are looking for insights to try and understand just how consumers might respond.

To try and get a directional insight into the consumer response for our clients, over the past few weeks my colleague Tina Hu and I have led a Gartner Supply Chain effort to understand how businesses (manufacturers and retailers alike) have been responding as the Chinese economy reopens.  First the good news – some companies such as Nike have been able to do an exceptional job in both engaging their community to drive sales, Nike app usage was up +80%, while rapidly scaling their online order fulfillment capabilities to the point where online sales have been accelerating in the triple digits (Here‘s a useful write-up for those who are interested to learn more).

But the reality is that for many conditions have been considerably more challenging. Consider H&M who, while seeing somewhat of a V-shaped bounce back in demand – see the below graphic from their most recent Earnings Report – are still considerably down on their 2019 performance levels even with at least 95% of stores open for the last 4 weeks.

So how can leaders in Western markets start leveraging insights from China? 

For many it starts with recognizing that what’s going on in China should only be considered directional. Conditions vary significantly from country to country whether in terms of the scale of virus spread, job losses, social safety nets or otherwise. Thus multiple scenarios must be developed with varying decision go/no-go decision points and clear incorporation of your organizations risk profile.

None-the-less China does present a strong case that retail sales in the West may well bounce back and they may come back relatively quickly as stores re-open. If you are anticipating such a response in your business, the questions therefore become:

  • How close to performance levels from prior to the COVID-19 outbreak will your broader retail segment be able to reach in the near term? For example, consider what it would mean for your organization if sales only return to 80-90% of their performance prior to the disruption. How can you ensure clear and informed trade-off decisions can be made across areas including cash flow, customer service levels, operating costs, inventory risk and, of course, your workforce.
  • What can you do to accelerate your organizations demand bounce back and ensure that when a ‘new normal’ is established you have been able to outperform your direct competitive peer set? Can investments still be made to accelerate capabilities required during the crisis that will also enable improved operations once the ‘new normal’ is established?

Gartner Clients: To help give you insight on the above and more, Tina Hu and I, have published the following report What Western Businesses Can Learn as China Comes Out of COVID-19 Lockdown

Finally, below is this week’s selection of interesting reads related to COVID-19 from across the web:

  • WTO predicts that global trade is set to plunge between 13% and 32% in 2020.
  • In China and India drones have been used to spray disinfectant on communities. The BBC takes a look at why this approach is unlikely to be used in the UK.
  • Useful discussion from the WSJ (paywall) on how some retailers have been able to take advantage of a logistics backlog at Amazon, offering delivery speeds at a faster rate than the Online Giant.
  • A useful summary of Online Tools has been put together by the folks over at Alcott Global (thanks to Radu Palamariu for the tip)
  • Finally, for Gartner clients interested in a perspective from a non-retail industry this is a great piece of research by my colleague Stephen Meyer: COVID-19: Take These Steps Now to Improve the Agility of Your Life Science Supply Chain 

Until next week – stay safe, look after your family and social distance.



Note: I’m currently publishing this blog each Monday morning (US Eastern Time) so if you’ve found this one useful please do look out for a weekly notification from my account on LinkedIn.

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